Ideas vs. Execution Shows Why Competition Is A Good Thing

from the it's-a-sign-of-a-market dept

I was recently talking with a group of folks who were discussing an idea for a new product, which I thought was pretty compelling. However, one of the concerns raised by someone in the group was the fact that there seemed to be a few other companies already in that space, and while they weren't doing the exact same thing, there was concern that this product wouldn't be considered "new." This is an issue that comes up a lot, and one that we recently talked about in suggesting that companies need to get over the wasteful and inefficient view that everything they do has to be wholly invented from scratch. Along those lines Chris Dixon has an excellent post, which he titles: "competition is overrated," but I think he really means that fear of competition is overrated. He notes that competition in a market often means you're on the right track:

Almost every good idea has already been built. Sometimes new ideas are just ahead of their time. There were probably 50 companies that tried to do viral video sharing before YouTube. Before 2005, when YouTube was founded, relatively few users had broadband and video cameras. YouTube also took advantage of the latest version of Flash that could play videos seamlessly.

Similarly, just because there are so many companies in a market, it doesn't mean any of them are really executing well:

Other times existing companies simply didn't execute well. Google and Facebook launched long after their competitors, but executed incredibly well and focused on the right things. When Google launched, other search engines like Yahoo, Excite, and Lycos were focused on becoming multipurpose "portals" and had de-prioritized search (Yahoo even outsourced their search technology).

In fact, this succinctly reiterates a whole bunch of the points that we've discussed repeatedly over time. First, there's a big difference between ideas and execution. Just because others are in the market (and even well established), it doesn't mean you can't do a better job. It also highlights the difference between invention and innovation, where invention is just coming up with something new, but innovation is really bringing it to market successfully. Facebook and Google are both great examples of innovative companies who didn't really "invent" their initial markets.

And Dixon then brings it back to the value of imitating, on which there's now an excellent book out (which I'm still only partially through) called Copycats. Dixon points out that in being a "follower" initially, you can build off of their work:

The fact that other entrepreneurs thought the idea was good enough to build can be a positive signal. They probably went through some kind of vetting process like talking to target users and doing some market research. By launching later, you can piggyback off the work they've already done.

On top of that, I would argue that you can also avoid some of the mistakes that they make.

In the end, he points out that worrying about competitors is really usually the least of your issues as a startup:

Startups are primarly competing against indifference, lack of awareness, and lack of understanding -- not other startups. For web startups this means you should worry about users simply not coming to your site, or when they do come, hitting the BACK button.

Consider that the startup equivalent of the messages told to tons of content creators these days: that obscurity is a much bigger threat than "piracy." In the same way that "piracy" is really just "competition," those too focused on that sort of competition will often miss the more important fact that you need to find actual, real users and customers who are going to stick around.

One other point on all of this: when you limit a market to just one player (via monopolies like patents), you can actually lose out. You don't get those other players in the market that you yourself can piggyback off of as well, and there's less incentive to get the formula right. Competition is a good thing in how it drives a market, but if you're working in a startup, you shouldn't necessarily be so worried about it directly.

Reader Comments

Not Quite the same

I think people are often paranoid that the idea they have has "already been done" - but usually you find that no two versions of an idea are quite the same.

Once again I don't like the your choice of words - invention vs innovation and ideas versus execution are really both false dichotomies - that only work if you take a particular interpretation of each of the words.

I think the real distinction is between "visionary ideas" and "enabling ideas". Visionary ideas are all very well - but unless you can carry them through they are useless. Enabling ideas on the other hand are all those little solutions to problems that are needed to allow the bigger idea to be executed.

The reason that visionary ideas are usually not important is that they are mostly fairly obvious, lots of people have them - but are inhibited by their inability to execute them. Just occasionally there is a visionary idea that has value - because only one person has it. However these ideas are really rare - probably less than 20 of them in the whole of human history.

"that obscurity is a much bigger threat than "piracy." In the same way that "piracy" is really just "competition,"" - fail. piracy isnt competition, it is just taking someone elses product and selling it yourself, with few if any of the costs involved in getting it to market.

in the end, there are very few (if any) markets on the internet that have only one player. the argument for the most part is a pretty major strawman.

Re:

Re:

You don't believe that obscurity is a bigger threat than piracy? I suppose for the past 5 decades artists have been signing away the rights to their creations to the labels because they didn't really like those pesky rights anyway, amirite?

No, it's because having the rights to their music wasn't as important to them as having a shot at being a household name and leveraging that fame to make money elsewhere. Now, the internet can allow a musician to maintain his rights and become known*. The musicians still won't be making much money on direct music sales, and the odds of becoming a household name for longer than 15 minutes are still a long shot but at least they will maintain commercial control over their art.

* Becoming a household name requires actual talent in the "new" system, versus a nice ass, a crap-ton of marketing dollars, and some type of sex/drug scandal.

Competition

It's a fact. You DON'T have to have the only product available. In America, you don't sell the product, you sell the "sizzle!" You can have a product with a hundred competitors but if your's is the "coolest" or easiest to use then it will stand out. Of course there are factors to screw you like a competitor suing you and they have deeper pockets to pursue the suit. Oh yeah, that's call product suppression. I'm glad no one does that in the software industry.

Competition makes entrepreneurship for the brave

I think in entrepreneurship, you have to have a certain amount of guts to succeed. You'll almost certainly fail and end up with absolutely nothing at least once or twice. You have to be willing and able to push through. I think the competitive nature of entrepreneurship is absolutely essential, otherwise we'd end up with good ideas that are absolutely horrifying as an end product.
I'm always curious to hear why people decide to pursue a career in entrepreneurship. For me, it's always been a goal, but I used to be terrified to quit my job and start something with no assurance of success. I obviously got over that fear. I ended up reading a book called The Evolution of the American Dream (http://entrepreneurial-america.com) which really inspired me to follow my version of the American Dream. Fellow entrepreneurs - what facilitated your decision? How did you see past the possibility of failure?